A Typical Pre-Payrolls Friday, RBA Policy Decision On Tuesday

ACGBs (YM +2.0 & XM +4.0) are holding richer after dealing in narrow ranges in today’s Sydney session. Today’s data drop was second-tier and offered little in the way of market-moving potential.

• All eyes were on US tsys after they extended their post-FOMC rally yesterday ahead of US Non-Farm Payrolls data later today. Bloomberg consensus sees nonfarm payrolls growth of 241k in April after another strong 303k in March. There has been no cash trading for US tsys in Asia today due to a holiday in Japan.
• Cash ACGBs are 3-4bps richer with the AU-US 10-year yield differential at -17bps.
• Swap rates are 3-4bps lower.
• The bills strip bull-flattened, with pricing flat to +4.
• The local market’s focus next week will be the RBA Policy Decision on Tuesday. 23 of the 24 economists surveyed by Bloomberg are expecting the cash rate to be left at 4.35%. The more contentious issue is whether the RBA reinstates its explicit tightening bias.
• RBA-dated OIS pricing is little changed across meetings, with the market pricing a 39% chance of a 25bps hike by September.
• (AFR) The RBA might not achieve its inflation target for at least two years without raising rates further unless Treasurer Jim Chalmers uses the coming budget to cool the economy, economists warn. (See link)